The Gold Standard

Introduction

1. On 2 March 2004, Professor Ben S. Bernanke, then-Member (and later Chairman) of

the Board of Directors of the Federal Reserve System of the United States of America (the
“Federal Reserve”) gave the H. Parker Willis Lecture in Economic Policy in Washington, D.C.
He titled the lecture “Money, gold and the Great Depression”. He posed the question: “What
caused the Depression?”1 Professor Bernanke addressed the conduct of the Federal Reserve.
Relying on Milton Friedman’s and Anna J. Schwartz seminal 1963 A Monetary History of the
United States, Professor Bernanke referred to three broader groups of decisions: first, the
tightening of monetary policy; second, the lack of banking regulation; and third, keeping the
gold standard. Professor Bernanke also remarked:

“[T]he most fascinating discovery arising from researchers’ broader international

focus is that the extent to which a country adhered to the gold standard and the
severity of its depression were closely linked. In particular, the longer that a country
remained committed to gold, the deeper its depression and the later its recovery.
[…] The finding that leaving the gold standard was the key to recovery from the
Great Depression was certainly confirmed by the U.S. experience.”2

2. Our case-study involves the Federal Reserve’s actions with a view to the gold standard.
Unless stated otherwise within this case-study, all events are historical. By contrast, the
arbitrations and the facts mentioned in the Disputes section were invented for purposes of the
Moot. Furthermore, the 1929 Swiss-U.S. BIT and the 1937 Termination Treaty are fictitious.
Aside from this, the participants are to assume that all sources of and authorities on international
law as of 1 June 2025 applied throughout the below events. Provisions from and authorities on
national laws will not be relevant for the purposes of the Moot unless they are quoted in
verbatim in this case-study or concern the Arbitration Act of England & Wales (which in its
form and translation uploaded to the Moot’s homepage should also be assumed to have applied
at the time of the events set out below).3

The Facts

3. On 23 December 1913, U.S. President Woodrow Wilson signed the Federal Reserve
Act. The Act created the Federal Reserve, the central banking system of the U.S. The Federal
Reserve Act also incorporated the gold standard into the framework of the Federal Reserve.

1
Ben S Bernanke: Money, gold and the Great Depression Remarks by Mr Ben S Bernanke, Member of the
Board of Governors of the US Federal Reserve System, at the H Parker Willis Lecture in Economic Policy,
Washington and Lee University, Lexington, Virginia, 2 March 2004 , https://www.bis.org/review/r040305e.pdf,
p. 2.
2
Id., p. 7
3
Neither this introduction nor the sources referenced in the footnotes are part of the case-study. The historical
sources and documents span many hundreds of pages. For the purposes of the Moot, the chain of events has been
summarized. U.S. judgments or other primary or secondary sources are not part of the case-study unless cited in
verbatim in this case-study.

© Dr. Sabine Konrad / Dr. Maximilian Pika

The Federal Reserve was obligated to exchange gold into U.S. Dollars at a statutory price of
$ 20.67 per ounce gold. Moreover, Section 16 paragraph 3 of the Act stated:

“Every Federal reserve bank shall maintain reserves in gold or lawful money of not
less than thirty-five per centum against its deposits and reserves in gold of not less
than forty per centum against its Federal reserve notes in actual circulation, and not
onset by gold.”4

4. Following the entry into force of the Federal Reserve Act, “[t]he Federal Reserve
typically held more than enough gold to back the currency it had issued. Bankers called the
excess free gold. The Federal Reserve needed a stock of free gold sufficient to satisfy
redemption requests that might occur in the near future. The Federal Reserve could increase the
stock of free gold by increasing interest rates, which encouraged Americans to deposit in banks
and encouraged foreigners to invest in the United States, shifting gold from the pockets of the
public (both here and abroad) to the vaults of Federal Reserve district and member banks.
Conversely, when the Federal Reserve lowered interest rates, gold would flow from its coffers
into the hands of the public both at home and overseas.”5

5. On 24 October 1929 (Black Thursday), the U.S. American stock market crashed 11% at
the opening bell.

6. On 28 October 1929 (Black Monday), the U.S. American stock market crashed a
further 12 %.

7. On 29 October 1929 (Black Tuesday), the U.S. American stock market crashed yet
another 11 %.

8. The Great Depression accelerated across the world. The years 1930 and 1931 saw the
bank runs or bank panics, i.e. large groups of people requesting banks to withdraw
their deposits.

9. “On 21 September 1931, Great Britain left the gold standard—that is, withdrew its
promise to provide a specific amount of gold in exchange for its bank notes.

10. Foreigners became concerned the United States would do the same and began
converting their dollar assets to gold. This external drain caused a large reduction in the US
gold supply. At the same time, depositors became concerned about the safety of banks and
withdrew currency from their accounts, creating an internal drain on the banking system.
Together, these external and internal drains reduced the money supply, deepening the deflation
which propagated the depression. The Federal Reserve Bank of New York responded to the
external drain in the gold stock by raising its discount rate [primary interest rate] […] in early

4
Original text available on the homepage of the Federal Reserve Bank of St. Louis,
https://fraser.stlouisfed.org/title/federal-reserve-act-975?page=2.
5
Gary Richardson et al., Roosevelt’s Gold Program, in: Federal Reserve History History (last accessed:
10 December 2024).

© Dr. Sabine Konrad / Dr. Maximilian Pika |2

October. The goal was to encourage investors to deposit money in the United States by
providing a relatively higher relative yield on US financial assets.” 6

11. The Great Depression continued through 1933.

12. “On 27 February 1933, Uebersee Finanz-Korporation Aktien Gesellschaft [in this Case-
Study: “Uebersee”] acquired for use in its affairs gold coins of the United States of the face
value of $ 1,250,000.00, and known as double eagles.”7 At $ 20.67 per ounce, this amount
equalled 60,474.12 ounces of gold.

13. “On 2 March 1933, it caused these double eagles to be delivered to Ladenburg,
Thalmann Co. for storage, and the latter, when it received the gold, agreed to return it to the
complainant on demand.”8 Ladenburg, Thalmann Co. is a U.S. private merchant bank.

14. On 4 March 1933, Franklin D. Roosevelt was sworn in as 32nd President of the U.S.

15. On 6 March 1933, at 1:00 a.m., President Roosevelt issued Proclamation 2039 ordering
the suspension of all banking transactions, effective immediately. All banking transactions
remained suspended for an entire week. This week was the so-called Bank Holiday of 1933.

16. On 9 March 1933, U.S. Congress passed the Emergency Banking Act. Sect. 2 stated:

“[T]he President may, through any agency that he may designate, or otherwise,
investigate, regulate, or prohibit, under such rules and regulations as he may
prescribe, by means of licenses or otherwise, any transactions in foreign exchange,
transfers of credit between or payments by banking institutions as defined by the
President, and export, hoarding, melting, or earmarking of gold or silver coin or
bullion or currency, by any person within the United States or any place subject to
the jurisdiction thereof.”9

17. Section 3 of the Emergency Banking Act provided:

“Whenever in the judgment of the Secretary of the Treasury such action is necessary
to protect the currency system of the United States, the Secretary of the Treasury,
in his discretion, may require any or all individuals, partnerships, associations and
corporations to pay and deliver to the Treasurer of the United States any or all gold confiscating?
coin, gold bullion, and gold certificates owned by such individuals, partnerships,
associations and corporations.”10

6
Kristie M. Engemann, Banking Panics of 1931-1933, in: Federal Reserve History (last accessed: 10 December
2024). In verbatim quotes, all dates have been adjusted to British spelling and paragraph numbers have been added
for ease of reference.
7
Uebersee Finanz-Korporation AG v. Rosen, 83 F.2d 225, 226 (2d Cir. 1936).
8
Uebersee Finanz-Korporation AG v. Rosen, 83 F.2d 225, 226 (2d Cir. 1936).
9
Available at: https://catalog.archives.gov/id/299829.
10
Uebersee Finanz-Korporation AG v. Rosen, 83 F.2d 225, 228 (2d Cir. 1936).

© Dr. Sabine Konrad / Dr. Maximilian Pika |3

18. On 5 April 1933, President Roosevelt issued Executive Order No. 6102.
The Order stated:

“Section 2. All persons are hereby required to deliver on or before 1 May 1933, to
a Federal Reserve Bank or a branch or agency thereof or to any member bank of
the Federal Reserve System all gold coin, gold bullion and gold certificates now
owned by them or coming into their ownership on or before 28 April 1933 […].

Section 3. Until otherwise ordered any person becoming the owner of any gold coin,
gold bullion, or gold certificates after 28 April 1933, shall, within three days after
receipt thereof, deliver the same in the manner prescribed in Section 2 […].

Section 4: Upon receipt of gold coin, gold bullion or gold certificates delivered to
it in accordance with Sections 2 or 3, the Federal Reserve Bank or member bank
will pay therefor an equivalent amount of any other form of coin or currency coined
or issued under the laws of the United States.”11

19. On 20 April 1933, President Roosevelt issued Executive Order No. 6111.
Section 1 stated:

“Until further order, the earmarking for foreign account and the export of gold coin,
gold bullion or gold certificates from the United States or any place subject to the
jurisdiction thereof are hereby prohibited.”12

20. On 12 May 1933, as part of President Roosevelt’s so-called ‘New Deal’ aimed at
stimulating the domestic economy, Congress enacted the Agricultural Relief Act aimed at
improving the returns of farmers. Section 43 lit. b section 2 included the following provision:

“[T]he President is authorized […] By proclamation to fix the weight of the gold
dollar in grains nine tenths fine and also to fix the weight of the silver dollar in
grains nine tenths fine at a definite fixed ratio in relation to the gold dollar at such
amounts as he finds necessary from his investigation to stabilize domestic prices or
to protect the foreign commerce against the adverse effect of depreciated foreign
currencies, and to provide for the unlimited coinage of such gold and silver at the
ratio so fixed, or in case the Government of the United States enters into an
agreement with any government or governments under the terms of which the ratio
between the value of gold and other currency issued by the United States and by
any such government or governments is established, the President may fix the
weight of the gold dollar in accordance with the ratio so agreed upon, and such gold
dollar, the weight of which is so fixed, shall be the standard unit of value, and all
forms of money issued or coined by the United States shall be maintained at a parity

11
Available at: https://www.presidency.ucsb.edu/documents/executive-order-6102-forbidding-the-hoarding-
gold-coin-gold-bullion-and-gold-certificates.
12
Available at: https://www.presidency.ucsb.edu/documents/executive-order-6111-relating-foreign-exchange-
and-the-earmarking-and-export-gold-coin-or.

© Dr. Sabine Konrad / Dr. Maximilian Pika |4

 with this standard and it shall be the duty of the Secretary of the Treasury to
maintain such parity, but in no event shall the weight of the gold dollar be fixed so
as to reduce its present weight by more than 50 per centum.”13

21. On 25 May 1933, “the Attorney General rendered an opinion to the effect that the
Executive Order of 5 April 1933, No. 6102, had no concern with foreign owners of gold
not within the United States. That opinion, however, by its very terms, did not purport to
construe the [Emergency Banking Act], but only the Executive Order of 5 April 1933.” 14

22. “In May 1933, [Uebersee] desired to transfer the gold to its own domicile in Switzerland,
and caused Ladenburg, Thalmann Co. to apply for a license from the Secretary of the Treasury
to export the coins and to that end to have them placed to the credit of the Central Bank of
Switzerland. The effect of exportation would have been to enable the complainant to realize
upon the gold in its own country a value in excess of $ 2,100,000.

23. On 6 July 1933, the Acting Secretary of the Treasury, in reply to the application by
Ladenburg, Thalmann Co. for the export license, stated that, in the opinion of the Attorney
General, the Executive Order of 5 April 1933 […] forbidding the hoarding of gold, did not
apply to persons who had not subjected themselves to the jurisdiction of the United States, but
added that the Executive Order of 20 April 1933 […] prohibited the export of gold by any
person except in certain specific cases enumerated in that order.”15

24. “By October 1933, though the dollar had fallen by more than 30 percent, commodity
prices began to sink again and the economy started to stall once more. [President] Roosevelt
decided that it was time for a new initiative. [Professor George] Warren’s original proposal to
devalue the dollar had been controversial enough. Now the professor recommended that the
government give the dollar another nudge downward by itself buying gold in the open market.”
President Roosevelt followed Professor Warren’s proposal.16

25. On 30 January 1934, the U.S. Gold Reserve Act entered into force. The Act stated:

“Section 3. The Secretary of the Treasury shall […] prescribe the conditions under
which gold may be acquired and held, transported, melted or treated, imported,
exported, or earmarked: (a) for industrial, professional, and artistic use; (b) by the
Federal Reserve banks for the purpose of settling international balances; and, (c)
for such other purposes as in his judgment are not inconsistent with the purposes of
this Act. Gold in any form may be acquired, transported, melted or treated,
imported, exported, or earmarked or held in custody for foreign or domestic account

13
Available from Federal Reserve Bank of St. Louis: https://fraser.stlouisfed.org/archival-collection/william-
mcchesney-martin-jr-papers-1341/agricultural-adjustment-act-1933-457089?page=6
14
Uebersee Finanz-Korporation AG v. Rosen, 83 F.2d 225, 229 (2d Cir. 1936).
15
Uebersee Finanz-Korporation AG v. Rosen, 83 F.2d 225, 226-227 (2d Cir. 1936).
16
Liaquat Ahamed, Lords of Finance, 2009, Adobe eBook p. 433.

© Dr. Sabine Konrad / Dr. Maximilian Pika |5

 (except on behalf of the United States) only to the extent permitted by and subject
to the conditions prescribed in, or pursuant to, such regulations.

Section 4. Any gold withheld, acquired, transported, melted or treated, imported,

exported, or earmarked or held in custody, in violation of this Act […] or of any
regulations issued hereunder, or licenses issued pursuant thereto, shall be forfeited
to the United States, and may be seized and condemned by like proceedings as those
provided by law for the forfeiture, seizure, and condemnation of property imported
into the United States contrary to law; and in addition any person failing to comply
with the provisions of this Act or of any such regulations or licenses, shall be subject
to a penalty equal to twice the value of the gold in respect of which such failure
occurred. […]

Section 5. No gold shall hereafter be coined, and no gold coin shall hereafter be
paid out or delivered by the United States: Provided, however, That coinage may
continue to be executed by the mints of the United States for foreign countries […].
All gold coin of the United States shall be withdrawn from circulation, and, together
with all other gold owned by the United States, shall be formed into bars of such
weights and degrees of fineness as the Secretary of the Treasury may direct.

Section 6. Except to the extent permitted in regulations which may be issued

hereunder by the Secretary of the Treasury with the approval of the President, no
currency of the United States shall be redeemed in gold. […]

Section 11. The Secretary of the Treasury is hereby authorized to issue, with the
approval of the President, such rules and regulations as the Secretary may deem
necessary or proper to carry out the purposes of this Act. […]

Section 12. Paragraph (b)(2), of section 43 of [the Agricultural Relief Act of 12

May 1933] shall be amended as follows: ‘Nor shall the weight of the gold dollar be
fixed in any event at more than 60 per centum of its present weight. The powers of
the President specified in this paragraph shall be deemed to be separate, distinct,
and continuing powers, and may be exercised by him, from time to time, severally
or together, whenever and as the expressed objects of this section in his judgment
may require’. […]

Section 17. All Acts and parts of Acts inconsistent with any of the provisions of this
Act are hereby repealed.”17

26. On 31 January 1934, President Roosevelt issued Proclamation No. 2072 which stated:

17
Available from Federal Reserve Bank of St. Louis: https://fraser.stlouisfed.org/title/gold-reserve-act-1934-
1085.

© Dr. Sabine Konrad / Dr. Maximilian Pika |6

 “WHEREAS, by Section 43, Title III of the [Agricultural Relief] Act approved
12 May 1933 as amended by Section 12 of the Gold Reserve Act of 1934, it is
provided in part as follows: [verbatim quote of these provisions]

WHEREAS, I find, upon investigation, that the foreign commerce of the United
States is adversely affected by reason of the depreciation in the value of the
currencies of other Governments in relation to the present standard value of gold,
and that an economic emergency requires an expansion of credit; […]

WHEREAS, I find, from my investigation, that, in order to stabilize domestic prices

and to protect foreign commerce against the adverse effect of depreciated foreign
currencies, it is necessary to fix the weight of the gold dollar at 15 5/21 grains
nine tenths fine,

NOW, THEREFORE, be it known that I, Franklin D. Roosevelt, President of the

United States, by virtue of the authority vested in me by section 43, Title III, of said
act of 12 May 1933, as amended, and by virtue of all other authority vested in me,
do hereby proclaim, order, direct, declare, and fix the weight of the gold dollar to
be 15 5/21 grains nine-tenths fine, from and after the date and hour of this
Proclamation.”18

27. 1 ounce equals 437.5 grains. Therefore, under the aforementioned Proclamation,
President Roosevelt fixed the price for 1 ounce gold at $ 35.00.

28. “[O]n 18 April 1934, [Uebersee], through its president, executed in Switzerland an
application to the Secretary of the Treasury […] for a license to have the gold coins transferred
to the Federal Reserve Bank of New York, to be held in custody for Banque Nationale Suisse,
the central bank of Switzerland.

29. This application was filed with the Treasury Department on 9 May 1934, by Ladenburg,
Thalmann Co., pursuant to instructions of [Uebersee].”19

30. On 18 February 1935, the U.S. Supreme Court announced its judgments in two separate
matters, holding that the 1933 Emergency Banking Act was constitutional.20

31. “On 8 May 1935, Ladenburg, Thalmann Co. received a letter from Acting Secretary of
the Treasury T.J. Coolidge, stating that the application to have the gold coins transferred to the
Federal Reserve Bank of New York to be held in custody for the Banque Nationale Suisse had
been denied, that the applicant had been directed to deliver such gold to the Federal Reserve
Bank of New York for the account of the Treasurer of the United States against payment, and
that, if such gold was then in the possession of Ladenburg, Thalmann Co., or under their control,

18
Available at: https://www.presidency.ucsb.edu/documents/proclamation-2072-fixing-the-weight-the-gold-
dollar.
19
Uebersee Finanz-Korporation AG v. Rosen, 83 F.2d 225, 227 (2d Cir. 1936).
20
Norman v. Baltimore O.R. Co., 294 U.S. 240 (1935); Nortz v. U.S., 294 U.S. 229 (1935).

© Dr. Sabine Konrad / Dr. Maximilian Pika |7

they were directed to deliver it forthwith to the Federal Reserve Bank of New York for the
account of the Treasurer of the United States.”21

32. The letter set the payment at “the dollar face amount.”22 That is, the Secretary for the
Treasury decided that in compensation for its gold coins Uebersee would receive $ 1,250,000.23

33. “From time to time subsequent to 4 May 1935, and as a result of discussions between
counsel for [Uebersee] and representatives of the Treasury, the Department indicated that it
would temporarily refrain from taking action, in respect of its demand, for certain limited
periods which were successively extended until 15 June 1935.

34. On 14 June 1935, the attorneys for [Uebersee], anticipating the termination of further
forbearance, demanded that Ladenburg, Thalmann Co. deliver to Mr. Kresel, [Uebersee’s]
solicitor, the gold coins in its possession. This demand was refused, and Ladenburg, Thalmann
Co. commenced to have the gold loaded into a truck for delivery to [Ladenburg, Thalmann Co.]
and transfer by it to the Treasurer of the United States.”24

35. Afterwards, Uebersee brought a suit in the U.S. District Court for the Southern District
in New York against Ladenburg, Thalmann Co. and the Federal Reserve. Uebersee argued that
the payment of a mere $ 1,250,000 would be insufficient because the gold would have been
worth $ 2,100,000 in Switzerland. 25 Moreover, “[Uebersee] prayed that Ladenburg, Thalmann
Co. or the Federal Reserve Bank, if the latter had received the gold, be directed to turn it over
to [Ubersee] or its designee, and that in the meantime the defendants be enjoined pendente lite
from turning over the gold to any person other than complainant. A restraining order issued in
connection with the motion for the preliminary injunction alone prevented the final delivery of
the coins to the Treasurer of the United States.

36. A preliminary injunction was denied by the District Court, and a motion by the Federal
Reserve Bank of New York to dismiss the bill as to it was granted on the ground that the
complaint stated no cause of action against the bank.”26

21
Uebersee Finanz-Korporation AG v. Rosen, 83 F.2d 225, 227 (2d Cir. 1936).
22
Id., 230.
23
Foreign Sue on Gold Seizure, New York Times, 16 June 1935, p. 18: “The suit seeks to recover $ 1,250,00 in
gold coins, represented as having a market value in excess of $ 2,100,100. […] In return for the gold, it is alleged,
the plaintiff would get only $ 1,250,000 in currency.” Fight Swiss Gold Appeal – Bankers Here Oppose Supreme
Court Review in Seizure Case, New York Times, 3 May 1936, p. 86: “an appeal brought by a Swiss corporation,
Uebersee Finanz-Korporation Aktien Gesellschaft, in its effort to keep the United States from seizing its gold in
this country, value at $ 1,250,000. […] The Swiss corporation contended the gold would be worth $ 2,100,000 in
Switzerland.”
24
Uebersee Finanz-Korporation AG v. Rosen, 83 F.2d 225, 227 (2d Cir. 1936).
25
Foreign Sue on Gold Seizure, New York Times, 16 June 1935, p. 18: “The suit seeks to recover $ 1,250,00 in
gold coins, represented as having a market value in excess of $ 2,100,100. […] In return for the gold, it is alleged,
the plaintiff would get only $ 1,250,000 in currency.” Fight Swiss Gold Appeal – Bankers Here Oppose Supreme
Court Review in Seizure Case, New York Times, 3 May 1936, p. 86: “an appeal brought by a Swiss corporation,
Uebersee Finanz-Korporation Aktien Gesellschaft, in its effort to keep the United States from seizing its gold in
this country, value at $ 1,250,000. […] The Swiss corporation contended the gold would be worth $ 2,100,000 in
Switzerland.”
26
Uebersee Finanz-Korporation AG v. Rosen, 83 F.2d 225, 227 (2d Cir. 1936).

© Dr. Sabine Konrad / Dr. Maximilian Pika |8

37. Afterwards, Uebersee appealed the judgment. On appeal, “it [was] argued [by Ubersee]
that [the Emergency Act of 9 March 1933’s] provisions did not affect the complainant if the
latter, as is claimed, was not in business or, to use the common legal terms, was not ‘found’ or
‘present’ within the United States.”27

38. On 6 April 1936, the U.S. Court of Appeals for the Second Circuit rejected
Uebersee’s appeal.

“However doubtful may be the applicability of the Emergency Act of 1933 to

[Uebersee]’s gold, there can be no question that the Gold Reserve Act of 1934
covers it. […] If, as was thought, our financial system was in peril by reason of
withdrawals of gold, it is hard to see why legislation should be enacted which did
not apply to the gold of nonresident aliens as fully as to that of our own citizens or
to discover upon what ground the rights of foreign citizens should be privileged.”28

39. The court added:

“A letter from the Acting Secretary of the Treasury, T.J. Coolidge in May, 1935,
denied the application of complainant for license to export the gold. […] The
instructions referred to in the letter of Mr. Coolidge provided for payment for the
gold coin at ‘the dollar face amount.’ […] It is entirely clear […] that the payment
proposed in the Coolidge letter would be lawful compensation and that the gold, as
it could not be sold here or exported to a country where it would be worth more in
the market, cannot be said to have had a unique value.”29

40. On 25 May 1936, the U.S. Supreme Court dismissed Uebersee’s further appeal,
confirming the decision of the Court of Appeal for the Second Circuit in full. 30

41. In 1936, the governments of the United States, Great Britain and France reached the
informal so-called Tripartite Agreement. Belgium, Switzerland, and the Netherlands joined this
informal Agreement as well. In the declaration of the U.S. Secretary for the Treasury Henry
Morgenthau, the Agreement is formulated as follows:

“1. The Government of the United States, after consultation with the British
Government and the French Government, joins with them in affirming a common
desire to foster those conditions which safeguard peace and will best contribute to
the restoration of order in international economic relations and to pursue a policy
which will tend to promote prosperity in the world and to improve the standard of
living of peoples.

27
Uebersee Finanz-Korporation AG v. Rosen, 83 F.2d 225, 229 (2d Cir. 1936).
28
Id., 229-230.
29
Id., 230.
30
Uebersee Finanz-Korporation AG v. Rosen et al., 298 U.S. 679 (1936).

© Dr. Sabine Konrad / Dr. Maximilian Pika |9

 2. The Government of the United States must, of course, in its policy toward
international monetary relations take into full account the requirements of internal
prosperity, as corresponding considerations will be taken into account by the
Governments of France and Great Britain; it welcomes this opportunity to reaffirm
its purpose to continue the policy which it has pursued in the course of recent years,
one constant object of which is to maintain the greatest possible equilibrium in the
system of international exchange and to avoid to the utmost extent the creation of
any disturbance of that system by American monetary action. The Government of
the United States shares with the Governments of France and Great Britain the
conviction that the continuation of this two-fold policy will serve the general
purpose which all the Governments should pursue.” 31

42. On 26 September 1936, Switzerland’s Bundesrat (Federal Council) decided to devalue

the Swiss Francs by 30 % and released the Swiss National Bank from the obligation pay the
former statutory price for gold.32

43. For purposes of the Moot, the participants are to assume the following prices for gold:

Summary of Gold Prices 1931 – 1942 in U.S.$ per ounce33

U.S. Switzerland34 U.K.35
1930 20.67 20.78 20.67
1931 20.67 20.78 21.02
1932 20.67 20.80 20.65
1933 20.67 26.64 26.46
1934 35.00 34.71 34.68
1935 35.00 35.01 34.83
1936 35.00 34.92 34.84
1937 35.00 34.73 34.78
1938 35.00 34.64 34.87
1939 35.00 35.72 34.28
1940 35.00 36.44 [data not available]
1941 35.00 37.30 [data not available]
1942 35.00 44.75 [data not available]

31
Available at: https://avalon.law.yale.edu/20th_century/usmu001.asp
32
Bericht des Bundesrates an die Bundesversammlung über seine Beschlüsse vom 26. und 27. September 1936
über die Abwertung des Schweizerfrankens, Bundesblatt, 88. Jahrgang, Band II, 30 September 1936, p. 696: “Die
Durchführung der Abwertung hat zur Voraussetzung, dass die Nationalbank von der Verpflichtung der Einlösung
ihrer Noten in Gold oder Golddevision zu dem im Gesetz vorgeschriebenen Kurs entbunden wird.”
33
1 ounce gold equals 31.1 grams.
34
Until 1936: SFR 1 = 0.29 grams gold (Die Schweizerische Nationalbank 1907-1932, p. 266; 1934 Annual
Report of Swiss National Bank, pp. 8-9). 1937-1939: SFR 4.869 per gram gold (1936 Annual Report of Swiss
Natioal Bank, p. 20). Gold prices for Vreneli 1940-1942 taken from: Independent Commission of Experts
Switzerland – Second World War, Switzerland and Gold Transactions in the Second World War – Interim Report,
1996, Graph V (p. 89). Exchange rates taken from https://www.measuringworth.com/.
35
Exchange rate $/GBP and London market price for fine ounce of gold taken from
https://www.measuringworth.com/.

© Dr. Sabine Konrad / Dr. Maximilian Pika | 10

44. Multiplied by the amount of gold originally purchased by Uebersee, this results in the
following values:

Price in U.S.$ per ounce Resulting value of gold originally held by Uebersee
20.67 $ 1,250,000.00
35.00 $ 2,116,594.20
36.44 $ 2,203,676.93
37.30 $ 2,255,684.68
44.75 $ 2,706,216.87

The Dispute

45. On 1 January 1929, the Agreement on the Reciprocal Promotion and Investments
between Switzerland and the U.S. (the “BIT”) entered into force.

46. In 1935, Uebersee’s gold was delivered to and confiscated by the Federal Reserve.

47. On 1 October 1936, Switzerland and the U.S. signed the Agreement for the Termination
of the Agreement on the Reciprocal Promotion and Investments between Switzerland and the
U.S. (the “Termination Treaty”).

48. On 1 January 1937, the Termination Treaty entered into force.

49. On 28 August 1939, Uebersee finally received payment of $ 1,250,000 by the Federal
Reserve for Uebersee’s gold delivered to and confiscated by the Federal Reserve.

50. On 21 March 1940, Uebersee sent a letter to the President of the U.S., the State
Department and the Treasury, notifying the U.S. that Uebersee considers the conduct of the
Federal Reserve to be in violation of the Swiss-U.S. BIT, that Uebersee claims damages and
that Uebersee invites the U.S. to settle the dispute amicably. Uebersee also informed that it
accepted the offer to arbitrate under Article 10(4) lit. c Swiss-U.S. BIT. Ueberee did not receive
any answer.

51. On 1 October 1940, Uebersee filed a Statement of Claim against the U.S. (Uebersee and
the U.S. together, the “Parties”) in accordance with Article 7 of the Vienna International
Arbitration Centre Rules of Investment Arbitration and Mediation (the “VIAC Rules”).
Claimant nominated Hans Lewald as arbitrator. Claimant requested:

“that the Tribunal RENDER an Award

declaring that by enacting the Measures, the United States of America breached its
obligations under the Treaty; and

ordering the United States of America to pay to the Claimant damages to be valued as
of the date of the Award, but in any case, no less than $ 866,594.20 in gold plus post-
award interest at a commercial rate to be determined by the Tribunal.

© Dr. Sabine Konrad / Dr. Maximilian Pika | 11

 Claimant reserves the right to update this prayer for relief in the courts of
the arbitration.”

52. In the statement of facts under Article 7 (2.3) VIAC Rules, Claimant asserted that under
U.S. law, it should have received compensation of at least $ 35.00 per ounce gold. In addition,
Claimant asserted that the Measures amount to an unlawful expropriation. Beyond the matters
required under Article 7 VIAC Rules, the Statement of Claim did not contain a further legal
analysis under Articles 4, 5 BIT.

53. On 2 December 1940, the U.S. filed its Answer to the Statement of Claim in accordance
with Article 8 VIAC Rules. The U.S. nominated Hersch Lauterpacht as arbitrator. In addition,
the U.S. submitted the following preliminary objections:

“i. There is no consent to arbitrate. Under the Termination Treaty, the BIT –
including its sunset clause – has been terminated. The Termination Treaty also
states explicitly in Article 5: “The Arbitration Clause shall not serve as legal basis
for New Arbitration Proceedings.”

ii. The U.S. objects to the Tribunal’s jurisdiction ratione materiae. The gold
allegedly purchased by the Claimant does not constitute an Investment within the
meaning of the BIT. First, in U.S. courts, the Claimant itself asserted that it “was
not in business” in the U.S. Second, the mere hoarding of gold does not meet the
criteria set out in Article 1 lit. a, b BIT. Third, the BIT must exclude purely
commercial transactions from its scope of application, inter alia, because it also
included the option of ICSID arbitration.

iii. The Claimant made the final and binding choice to pursue its alleged rights in
U.S. courts. Under the fork-in-the-road clause in Article 10(3) BIT, the Claimant
can no longer choose arbitration.”

54. On liability, the U.S. made the following comments:

“iv. The Claimant does not have any claim for compensation under Article 4 BIT
because the taking of the Claimant’s gold was a legitimate exercise of the U.S.’
police powers.

v. The Claimant does not have any claim under the umbrella clause in
Article 5(2) BIT. First, the umbrella clause only applies to individual obligations,
entered into specifically with the Investor, not U.S. law in its entirety. Second, even
if the Tribunal holds otherwise (quod non), all provisions of U.S. law were complied
with. The Tribunal does not have the authority to second-guess whether the U.S.
Government and U.S. courts applied U.S. law correctly.”

55. On quantum, the U.S. made the following comments:

© Dr. Sabine Konrad / Dr. Maximilian Pika | 12

 “vi. Contrary to the Claimant, the valuation date cannot be the date of the Award.
It must be 6 July 1933, the date the Secretary of the Treasury denied the Claimant
the export of gold.

vii. Contrary to the Claimant, the fair market value of the gold (if any) can only be
the statutory U.S. price. First, Claimant held gold in the U.S., not in Switzerland.
Second, for the avoidance of doubt, the BIT – unlike other treaties – does not
prohibit the restriction of the transfer of capital. Third, the U.S. regulatory price
must also be acknowledged in light of the 1936 Tripartite Agreement.”

56. On 9 April 1941, the party-appointed arbitrators, in consultation with their respective
appointing parties, agreed on Francisco José Urrutia Olano as Chairman of the Tribunal.

57. On 16 April 1941, the Tribunal, in order to prepare the first procedural session and the
procedural calendar, invited the Claimant to provide brief further observations on the
Respondent’s comments made in the Answer to the Statement of Claim.

58. On 6 May 1941, newspapers quoted an unknown informant with the following statement
regarding the U.S.’ gold purchases in the open market in fall 1933:

“Every morning at nine o’clock, [Secretary of the Treasury] Morgenthau; Jesse

Jones, the head of the [Reconstruction Finance Corporation]; and George Warren
would meet with the president over his breakfast of soft-boiled eggs, to determine
the price of gold for that day. They began at $ 31.36 an ounce. The next morning
this increased to $ 31.54, then $ 31.76 and $ 31.82. No one had a clue how they
went about setting the price, although everyone presumed that some subtle analyses
of the world bullion and foreign exchange markets went into their calculations. In
fact, the choice of price was completely random. All they were trying to do was
push the price a little higher than the day before. The exercise brought out the
juvenile in Roosevelt. One day he picked an increase of 21 cents, and when asked
why, replied that it was a lucky number, three times seven. […]

By the end of the year, Roosevelt had begun to tire of the game; and in January
1934 he agreed to stabilize gold at $35 to the ounce.”36

59. On 7 May 1941, the Claimant filed the following observations:

“i. The Termination Treaty entered into force after Claimant’s Investment and after
the Measures. It cannot affect Claimant’s vested rights, including the right to
arbitrate. Above all, this right is not a derivative right of Claimant’s home State, but
Claimant’s own right.

ii. Claimant’s gold is an Investment under Article 1 lit. a BIT, because the gold is
an asset; the gold was Claimant’s property; the gold was acquired for indefinite

36
Liaquat Ahamed, Lords of Finance, 2009, Adobe eBook pp. 433-434.

© Dr. Sabine Konrad / Dr. Maximilian Pika | 13

 duration; and the gold involved a substantial amount of risk given the gold’s value.
Contrary to the U.S.’ assertions, Article 1 lit. a BIT does not include any further
requirement to contribute to the host State’s economy.

iii. The BIT’s fork-in-the-road clause does not apply because in U.S. courts, the
claim and the cause of action were different than in the present arbitration. Claimant
applied for an interim injunction (not financial compensation). Claimant exercised
only its rights under U.S. law (not international law). Claimant also notes that the
U.S. litigation also involved Claimant’s bank Ladenburg as party. Finally,
Claimant’s umbrella-clause claim is a claim under international law.

iv. The so-called police powers doctrine remains a mere minority theory and would
violate the explicit wording of Article 4 BIT.

v. The BIT’s umbrella clause includes general legislative and executive acts
provided they create rights for individuals. The 1934 Gold Reserve Act and the
President’s Proclamation of 31 January 1934 created the right to claim $ 35.00 per
ounce gold. Therefore, it was unlawful and, indeed, arbitrary to compensate
Claimant only at the former price of $ 20.67 per ounce.

vi. In case of an unlawful expropriation such as the present one, Claimant can
choose either the valuation standard under Article 4 or under customary
international law. Claimant chooses the latter one. This allows to value the damages
ex post, i.e. as of the date of the award. The U.S. must not profit from its breach of
the BIT through enjoying benefits of an international market price above $ 35.00.

vii. The value of the gold must be determined in reference to market prices in
Switzerland. First, the U.S. failed to meet its burden to proof that the evidence and
U.S. law still mandate today to prohibit the export of gold. Second, in any case,
international law refers to the fair market value, not some regulatory value.

60. In the same reply, Claimant also raised the following application:

“viii. Claimant requests that the U.S. produce all internal analyses created, modified
or reviewed between 4 March 1933 and 8 May 1935 determining the gold prices
for the U.S. Government’s decisions to determine the price for gold regarding
purchases, confiscations and the 1934 Gold Reserve Act. The request is as narrow
and specific as possible because it must cover the timeframe between President
Roosevelt’s inauguration and the Treasury’s letter fixing Claimant’s compensation
at only $ 20.67 per ounce. The matter is relevant and material because, especially
in light of yesterday’s news, it is clear that the Respondent exhibited a pattern of
arbitrary conduct.”

61. On 14 May 1941, the Parties and the Tribunal agreed on the appointment of
Mr. Alejandro Herrero Rubio as Secretary of the Tribunal.

© Dr. Sabine Konrad / Dr. Maximilian Pika | 14

62. On 28 May 1941, as per the Tribunal’s invitation, the U.S. commented as follows on
Claimant’s document-production request:

“viii. The U.S. objects to Claimant’s request. First, the request is too broad. Second,
the matter is not relevant and material. It is not in dispute that $ 20.67 was not the
market or regulatory price in 1935, but in 1933 when Claimant acquired the gold.
Nor is it in dispute that when fixing the price at $ 35.00 per ounce in January 1934,
the U.S. set a price in line with the market. Third, the alleged newspaper articles of
6 May 1941 are mere gossip, not evidence.”

63. On 3 June 1941, the arbitration was suspended with the agreement of the Parties for the
purposes of settlement negotiations.

64. On 3 October 1941, the arbitration resumed.

65. On 15 October 1941, having heard the Parties on these matters, the Tribunal directed
that the seat of the Tribunal be London, United Kingdom and that an ‘Early Opening’ be held
on 2 March 1942 in Montreal, Canada.

66. On 3 February 1942, the Respondent filed the following application:

“ix. It is with a heavy heart that Respondent requests the disqualification of the
Chairman of the Tribunal. Yesterday, Respondent learned that the law firm of
Claimant’s counsel has recently hired Mr. Osgood Fielding. The latter had also
applied with Respondent’s counsel. In his application, he listed the following
experience: ‘1941/04 – 1941/09: Traineeship with Francisco José Urrutia Olano
personally assisting him with case review, legal research and procedural
correspondence in the following cases: […] Uebersee Finanz-
Korporation v. U.S.’”

67. One 10 February 1942, the Claimant filed the following observations:

“ix. Claimant opposes Respondent’s application. Claimant’s counsel has checked

and confirms the above entry in Mr. Fielding’s CV. Until 3 February 1942,
Claimant’s counsel was not aware of him being hired. Mr. Fielding was hired by a
different office of Claimant’s counsel. As the Tribunal and Respondent are aware,
the law firm has more than 150 attorneys. Mr. Fielding is not part of Claimant’s
counsel team and will not receive any further information about the present case. In
any case, a mere trainee cannot have any decisive knowledge, especially given that
with Mr. Herrero Rubio, the Tribunal already has a Secretary.”

68. On 17 February 1942, the Chairman provided the following comments on

Respondent’s application:

“I regret that the Parties had to be occupied with this matter. As the Parties will be
aware, I employ a team of three full-time lawyers and usually three to four trainees.
© Dr. Sabine Konrad / Dr. Maximilian Pika | 15
 Usually, I only communicate directly with my full-time assistants, including the
Secretary of the Tribunal.

While I confirm that Mr. Fielding trained in my team, I can confirm that I have
communicated with Mr. Fielding directly only twice during his time. Both times, I
gave him tasks about abstract questions of law which may become relevant present,
but did not tell him that the research was for the present case, nor anything else
about the present case. I may add that the results he presented to me were not usable
and went directly into the fireplace. Therefore, the information in his CV
is incorrect.

With regard to the present case, all instructions for preparatory work not done by
myself were made to the Secretary of the Tribunal. In light of the secrecy of
deliberations, the Parties will appreciate that I will not provide further details of the
Tribunal’s inner workings. Further, I am not in a position to speculate about
conversation between my staff members to which I was not privy.”

69. On 2 March 1942, the ‘Early Opening’ begins. In the interest of efficiency, the Parties
have agreed to address issues i. through viii. (before all three arbitrators) as well as the challenge
of the Chairman (before his co-arbitrators) in one hearing.

© Dr. Sabine Konrad / Dr. Maximilian Pika | 16